The crypto contagion worsens: Coinbase will cut almost 1,000 jobs

Coinbase Global Inc. It said Tuesday it will cut its headcount by about 20%, or about 950 employees, as part of a restructuring plan, in the third round of layoffs from the cryptocurrency exchange since last year.

The company said it expects to incur around $149 million to $163 million in restructuring expenses. Its shares were down 2.7% before the opening of the session, after having risen more than 5% after the announcement of the layoffs.

“The entire industry is going through a crisis of confidence and the volume of transactions remains very weak. These job cuts are a reflection of the current challenging environment.” said Owen Lau, an analyst at Oppenheimer.

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Last year, rising interest rates and fears of an economic downturn wiped out more than a trillion dollars from the cryptocurrency sector. The slump also forced key industry players such as Three Arrows Capital and Celsius Network to shut down.

The biggest blow, however, came after the largest cryptocurrency exchange, FTX, filed for bankruptcy in November. Its rapid decline has triggered harsh regulatory scrutiny over the way major exchanges guard user funds.

“We have also witnessed the consequences of unscrupulous players in the industry, and there could still be more contagion”Coinbase CEO Brian Armstrong said in a blog post. “We are going to close several projects in which we have a lower probability of success.”

Coinbase said it had no additional comment on the plan.

The woes of the crypto world have continued this year, marked by plummeting deposits, layoffs and multiple legal hurdles.

Coinbase cut more than 60 jobs in its institutional recruiting and onboarding teams in November, after cutting 1,100 jobs, or 18% of its workforce, in June.

The company’s shares lost about 86% of their value last year, in line with the industry’s fall from grace.

Source: Reuters